The measure is dubbed “the energy sector’s functioning plan
which involves the cessation of gas deliveries from the Russian
Federation” and comes into effect on June 16, the document
states.

With that, Kiev will launch its case against the Russian energy
giant Gazprom at the Stockholm Court of Arbitration, the
statement said. Yatsenyuk called for “preparations to be
completed” for the process.

Moscow set Monday as a deadline for Ukraine to pay off part of
its gas debt of $1.95 billion.

Yatseniuk also ordered the national regulator to revise
transportation tariffs for Russian gas via Ukraine as Russia
ships around a half of its gas exports to Europe through Ukraine.

Despite ordering the measures effectively undermining current gas
talks with Russia, Yatsenyuk still blamed Moscow for the failure
of the talks.

“Due to Russia’s deliberate rejection to settle the conflict,
Ukraine’s and the EU’s energy security is being undermined,”
the Kiev official claimed.

Yatsenyuk also decried "rejection" of what he called
“constructive offers of the Ukrainian side that correspond to
the European Commission’s position.”

The head of Naftogaz, Andrey Kobalev, said on Friday that Ukraine
is hoping to reach a deal with Gazprom in two days’ time, but is
also “ready for the worst case scenario – the halting of
deliveries and transit of gas from Russia.”

Ukraine has more than 15 billion cubic meters of Russian gas
accumulated in its reserves, Kobalev revealed. With that, Ukraine
“will do everything possible for uninterrupted transfer”
of gas to Europe, he assured.

At the same time, the Naftogaz head claimed that Ukraine is ready
“to reverse the pipes” if need be – i.e., to buy the Russian gas
from European countries.

On Friday, Kiev also appointed its own price for Russian gas -
$326 per 1,000 cubic meters - “while Ukraine’s lawsuit in
considered” in Stockholm.

“Kiev finds the option put forward by the European Commission
unacceptable – the price around $385 - with the average price at
$326,” Kobalev said.

He added the price would be “temporary” for the period
of 18 months while the international court in Stockholm reviews
Ukraine’s complaint against Russia’s pricing.

Kobalev declared European companies are ready to sell gas to
Ukraine for less than $325 per 1,000 cubic meters. The names of
the companies were not elaborated on, but the Naftogaz head said
they were ready to pay this price.

Russia: No talks till Monday deadline

Russia’s Ministry of Energy announced Friday that Moscow is not
going to hold negotiations with either the European Commission or
Ukrainian Energy Ministry’s delegations before the deadline set
for Kiev to pay its debt expires at 06:00 GMT Monday.

If the Russian gas giant does not receive US$1.951 billion
overdue payment by that time, Ukraine would have to pay for its
gas supplies in advance.

“If nothing has been paid, nothing will be supplied,”
Gazprom CEO Aleksey Miller said on Thursday.

Kremlin spokesman Dmitry Peskov on Friday said that Moscow has no
information on whether the gas talks with Ukraine will continue.
Russia has not received any response to what Peskov said were
“more than flexible offers” during the negotiations.

Debt and price dispute

Ukraine’s gas debt currently exceeds $4 billion. The latest price
proposed by Russia stands at $385 per thousand cubic meters, a
market-level price paid by the majority of other European
countries, and $100 discount from the original offer. This is
roughly the same price that was agreed on by former Prime
Minister Yulia Timoshenko back in 2009.

But Kiev still wants a cut since the government of ousted
President Viktor Yanukovich used to enjoy a couple of additional
discounts.

In 2010, the gas price for Ukraine dropped to $315 per 1,000
cubic meters - in return for prolongation of the agreement to
station Russia's Black Sea Fleet base in the harbor of
Sevastopol, Crimea. Three years later, in late 2013, Yanukovich
agreed to enter a Customs Union with Russia, Kazakhstan and
Belarus, which saw the gas price drop even lower, to $268 per
1,000 cubic meters.

These discounts were annulled as the new government in Ukraine
refused to pay for gas supplied under payment upon delivery
scheme.

“This government that wants to have ‘normal relations with
Russia’ … and at the same time wants to place Ukraine in the
Western sphere of interests, which would be against the wishes of
millions of ordinary Ukrainians,” Marcus Papadopoulos,
editor of a UK political magazine Politics First, told RT.

“And then Ukraine wants to have discounted prices from Russia
for Russian natural gas – that is unacceptable, that is
intolerable,” Papadopoulos said.

Yatsenyuk's approach

“If gas is a political weapon, then this political weapon is
in the hands of the Russian government. And if gas is a commodity
- as it typically is all across the world - then our trade is
based on a contract and not based on whether Russia likes the
Ukrainian government or not,” Yatsenyuk said.

“The strategy of the Ukrainian side is outright
blackmail,” Miller said. “From the start - they took no
constructive steps, made no compromises and apparently want only
to maximally aggravate our gas relationship.”

Implications for EU

The gas war may spill over and affect the EU, as witnessed in the
past. In 2006, gas supplies were cut off after Ukraine siphoned
fuel intended for Europe from the transit pipes. In 2009, Kiev
did it again.

In early April, Russian President Vladimir Putin wrote a letter
to the heads of European states, warning them about the Ukrainian
gas debt and urged to sit down and find a solution to the problem
(http://rt.com/politics/official-word/putin-message-european-leaders-748/).

The EU replied that Gazprom should follow its contractual
obligations, and urged it to warn in advance of any possible
disruptions to gas transit through Ukraine.

Bill Doares from the International Action Center thinks Kiev is
treading a dangerous path in these gas negotiations.

“The Ukrainian government is being in transition, putting its
own population at risk and now putting the population of Europe
at risk. I think in this particular case the Russian government
is not acting politically, but is acting on a strictly economic
market basis,” Doares said.

“They are offering gas to Ukraine at a lower price than
Europe is paying. You could say that Russia was acting
politically earlier, when it gave large discounts to Ukraine in a
desire of stability. But if the Ukrainian government is behaving
in a hostile way – there is no reason for Russia to give Ukraine
special political consideration,” he concluded.